This was announced by CBN on its website on Thursday and it reads,
“The Central Bank of Nigerian and the Asset Management Company of Nigeria (AMCON) are pleased to announce the completion of a Share Purchase Agreement for the acquisition of 100% of the equity in Polaris Bank (‘Polaris’ or ‘the bank’) by Strategic Capital Investment Limited (SCIL).”
CBN also claimed that the SCIL has paid an upfront payment of #50 billion and will repay fully the sum of #1.305 trillion being the consideration bonds injected by the CBN. This is accepting the terms and conditions that come with the acquisition.
The repayment of the #1.3 trillion means that the bank with has to pay Polaris bank #52 billion per year to redeem the bonds raised by AMCON. For them to repay the loans, they will have to generate profits of over #60 billion.
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Polaris Denial of CBN Selling it Off
Polaris bank had earlier denied the acquisition by urging people not to pay yield to such rumors flying around. In their words, it said,
“Our attention has been drawn to an online report on the purported sale of Polaris Bank Limited. This publication is speculative, deliberately intended to create panic, and should be disregarded by the banking public.”
A confirmation however came when the CBN confirmed the acquisition via its tweets. This also questions the trust of the management which has been denying the acquisition for months, making the depositors believe they will not be sold.
What the Sale Means
The Bank was sold for #50 billion and what this means is that,
- For the bank to repay the loan, it will have to generate a profit of over #60 billion over the next 25 years.
- The owners may have to explore an equity raise, sale of assets, issuing more bonds, and from its profits.
- Another might be for the owners to go through a merger with a much bigger bank.
CBN Governor’s Comments
“This process has provided the CBN with an unprecedented opportunity to recover its intervention funds in full and promote financial stability and inclusive growth. We wish SCIL well as they implement growth plans to build the bank from the strong foundations that have been established.”
Polaris was reported to have made a profit of #28 billion during COVID-19. However, its profits fell to #19.4 billion on gross earnings of about #105 billion. Hence, the acquisition.
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